Topley's Top Ten - November 22, 2019

1. Vanguard vs. The World

2. This chart shows how Vanguard’s explosive growth has ‘taken on a life of its own’

Yusuf Khan
Nov. 22, 2019, 05:47 AM

The OECD on Thursday released a warning to the global economy — GDP growth is going to drop, and it’s up to governments to stop fighting to fix it.
In a statement, the OECD said that world GDP growth this year is expected to fall to 2.9%, “its lowest annual rate since the financial crisis,” and is expected to hover at that level in 2020 and 2021.
The OECD highlighted the US-China trade war as the reason for this decline.
View Business Insider’s homepage for more stories.

https://markets.businessinsider.com/news/stocks/oecd-chart-trump-china-trade-war-hurting-global-economy-2019-gdp-growth-2019-11-1028710770

3. Odds of A China Trade Deal.

Never saw this chart but odds fading that Trump gets deal done before election.

Zero Hedge

“Mortgage Rates Steady Despite Bond Market Weakness”

by Calculated Risk on 11/21/2019 07:10:00 PM

From Matthew Graham at MortgageNewsDaily: Mortgage Rates Steady Despite Bond Market Weakness

Mortgage rates spent a 2nd day with the average lender holding relatively steady. This follows a decent winning streak over the previous week and a half with the net effect being at least an eighth of a percent (.125%) improvement on the average conventional 30yr fixed quote.

Holding steady was a bit anticlimactic yesterday because the broader bond market (specifically, the benchmark US 10yr Treasury yield) indicated more improvement than we actually saw. That had a lot to do with the underperformance of bonds that specifically underlie mortgages (MBS or “mortgage-backed securities). But whereas MBS lagged Treasuries yesterday, they outperformed today, thus allowing lenders to keep rates unchanged even as 10yr yields moved moderately higher. [Today’s Most Prevalent Rates For Top Tier Scenarios 30YR FIXED – 3.75%]

4. Mortgage Rates Stayed Above 2016 Lows Despite Bond Action

“Mortgage Rates Steady Despite Bond Market Weakness”

by Calculated Risk on 11/21/2019 07:10:00 PM

From Matthew Graham at MortgageNewsDaily: Mortgage Rates Steady Despite Bond Market Weakness

https://www.calculatedriskblog.com/

5. The Fed Slaps Down Negative Interest Rates

by Wolf Richter • Nov 20, 2019 • 82 Comments

A serious rejection in its first major discussion of negative interest rates recounted in the FOMC minutes.

The minutes for the FOMC meeting on October 29-30, released today, shed some light on the laundry list of discussions arising out of the Fed’s current review of monetary policy strategy, where it tries to figure out how to line up the tools to be used during the next crisis, and which tools to line up.

All kinds of tools are being kicked around in addition to the tools used during the last crisis – these potential new tools ranged from “rate caps” on long-term Treasury securities to various repo facilities and negative interest rates.

But one potential tool was rejected by “all participants”: negative interest rates.

And the Fed had a lot to say about negative interest rates and their drawbacks for the US. This is the first time that a detailed discussion of negative interest rates – with pros and cons – were referenced in the minutes – showing how controversial that topic has become among central banks globally. You can essentially see the Fed’s distaste for them in the US.

In the quote below from the minutes, the paragraph divisions and bullet points are mine to make the pathologically long paragraphs of the minutes, which are purposefully designed to not be read by humans, more readable for humans:

“The briefing also discussed negative interest rates, a policy option implemented by several foreign central banks. The staff noted that although the evidence so far suggested that this tool had provided accommodation in jurisdictions where it had been employed, there were also indications of possible adverse side effects.

“Moreover, differences between the U.S. financial system and the financial systems of those jurisdictions suggested that the foreign experience may not provide a useful guide in assessing whether negative rates would be effective in the United States.

“All participants judged that negative interest rates currently did not appear to be an attractive monetary policy tool in the United States.

“Participants commented

That there was limited scope to bring the policy rate into negative territory,
That the evidence on the beneficial effects of negative interest rates abroad was mixed,
And that it was unclear what effects negative rates might have on the willingness of financial intermediaries to lend and on the spending plans of households and businesses.

“Participants noted that negative interest rates would entail risks of introducing significant complexity or distortions to the financial system.

The Fed Slaps Down Negative Interest Rates

6. Micro Businesses

Micro businesses (one to nine employees): Business administration and support services rank 1st

The industry with the greatest number of micro businesses are found within the professional, scientific and technical sector. 451,740 micro businesses are currently in operation, having been set up in the past decade. Of those businesses, 117,110 have successfully stood the test of time and surviving 10 years or more.

The Most Popular Industry Sectors For Successful Startup Businesses

https://www.valuewalk.com/2019/11/business-administration-startups/

7. Generics wait years for Medicare coverage

Marisa Fernandez1 hour ago

Adapted from The Association for Accessible Medicines analysis; Chart: Andrew Witherspoon/Axios

Medicare is taking years longer than private insurance to cover some generic drugs, meaning seniors could be paying more for their prescriptions, according to Access for Affordable Medicines, a lobbying group for the generic drug industry.

Between the lines: A 2017 policy change made the distinction between generics and brand-name drugs unclear, forcing the two types to compete within the same formulary tiers, Bloomberg notes.

Yes, but: The Centers for Medicare and Medicaid Services has argued this policy keeps Medicare premiums down by encouraging flexibility in the plan’s design and increasing negotiating leverage with drugmakers, Axios’ Marisa Fernandez writes.

Go deeper: The downside of cheap generics

https://www.axios.com/medicare-generic-drug-pricing-2c45070d-171f-4d70-8bed-810e2c49221e.html

8. Rituals and Routines

Posted November 21, 2019 by Ben Carlson

Dana Cavalea became the strength and conditioning coach for the New York Yankees at the tender age of 23.

He quickly learned professional athletes who play more than 30 pre-season games, 162 regular-season games, and potentially dozens of more games in the playoffs need to have a structured routine in place in order to succeed.

In his book, Habits of a Champion, Cavalea described a typical day in the life of a Major League Baseball player:

For 8 months out of the year, you’re doing nothing but playing baseball.
Workdays consist of sleeping in until 11 am or noon.
By 3-4 pm, you’re expected to be at the “office”.
Soak for 20 minutes in the hot tub to loosen up.
Your clothes are washed and ready to go when you arrive.
Personalized stretch and workout from the strength and conditioning coach for around 40 minutes.
Grab something to eat.
Head out to the field to stretch some more.
Batting practice and throw some balls.
Pre-game meal.
Stretch yet again.
Play the game which can last anywhere from 3-4 hours.
Post-game cold tub, shower and eat (likely at a world-class restaurant).
Go to bed well after midnight.
Wake up the next day and do it all over again.

When we had him on our podcast recently, I asked Coach Cavalea if the players ever needed to spice things up to add some variety to this routine. He rightly corrected me that I was looking at this the wrong way:

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Beyond the typical gameday schedule, each player had their own personal workouts and methods within that routine. Cavalea explained how Mariano Rivera, arguably the greatest closer of all-time, had the same exact warm-up routine during every single game:

But what many do not know about the Sandman is that two innings before heading out to the bullpen, he was on his back, listening to salsa music, getting stretched and massaged by yours truly. Every, single, game. When that 5th inning came around, if I didn’t have his green tea and a granola bar waiting, he was not a happy man. Screaming my name like a lunatic throughout the clubhouse. He was consistent, and he expected consistency. That was his method.

The tolerance for repetition here is astounding.

This is going to sound like a ridiculous humblebrag but here I go…

Last week I was talking to a colleague who asked what I do to stay in shape. When I described my workout routine of lifting weights 2-3 times a week and a combination of running/cardio on the other days he was less than blow away. “That’s it?” was the general takeaway.

When I thought about this some more I realized the workout routine itself isn’t what has allowed me to put off the dad-bod all these years. It’s the fact that I’ve been consistently lifting weights and working out since I was 16 years old. I’ve basically been going to the gym on a consistent basis for more than 20 years.

The consistency of working out has mattered much more than the actual workout itself (which has varied as I’ve gotten older).

Consistency is the driving force behind compounding.

Cavalea wrote, “Consistency over time yields positive results” but he also said, “Unsuccessful people are consistent too.” The difference is unsuccessful people don’t have a routine.

https://awealthofcommonsense.com/2019/11/rituals-and-routines/